2015 (12) TMI 798 - AT - Central Excise

Waiver of pre deposit - whether the appellant, during the forfeiture period i.e. during the period from 6.7.2012 to 7.3.2013, were, in accordance with the provisions of Rule 8(3A) of the Central Excise Rules,2002, required to pay duty without utilizing the cenvat credit - Held that - In the case of Indsur Global Ltd. (2014 (12) TMI 585 - GUJARAT HIGH COURT), the High Court has gone into the question of constitutionality of the provision of the provisions of Rule 8(3A), which requires an assessee to pay duty without utilizing the cenvat credit during the forfeiture period i.e. during the period of failure to pay the duty in respect of a month beyond the period of one month from the due date and the Hon ble High Court has held that this provision is unconstitutional. We, therefore, hold that the appellant have a prima facie case in their favour. Hence, the requirement of pre-deposit of duty demand, interest and penalty is waived for hearing of the appeal and recovery thereof is stayed - Stay granted.

Summary

Issues:
1. Duty liability payment delay and subsequent penalty imposition.
2. Interpretation of Rule 8(3A) of the Central Excise Rules, 2002.
3. Applicability of cenvat credit during the forfeiture period.

Analysis:
1. The appeal involved a case where the appellants, manufacturers of Ethyl Acetate and Thinner, failed to pay the total duty liability of &8377; 4,19,200/- by the due date in May 2012. The subsequent delay in payment led to proceedings initiated against them, resulting in a duty demand of &8377; 1,52,74,862/-, interest, and a penalty of &8377; 15 Lakhs imposed by the Commissioner. The appeal challenged this order, emphasizing the bona fide mistake in payment and citing a relevant judgment to support their case.

2. The main dispute revolved around the interpretation of Rule 8(3A) of the Central Excise Rules, 2002, which requires an assessee to pay duty consignment-wise without utilizing cenvat credit during the forfeiture period if the duty liability is not discharged by the due date. The appellant argued that the provision was unconstitutional, citing a judgment by the Gujarat High Court. The Departmental Representative, however, relied on judgments from various High Courts and Tribunals to support the applicability of Rule 8(3A).

3. Upon considering the submissions and perusing the records, the Tribunal analyzed the constitutionality of Rule 8(3A) based on relevant judgments. The Tribunal noted that the Gujarat High Court had deemed the provision unconstitutional in a specific case. Since other courts had not addressed this issue, the Tribunal held that the appellants had a prima facie case in their favor. Consequently, the requirement of pre-deposit of duty demand, interest, and penalty was waived for the appeal hearing, and recovery was stayed. The Tribunal allowed the stay application based on the constitutional question surrounding Rule 8(3A).